While we know people are migrating out of urban areas to seek more room in the suburbs, these two different kinds of housing markets are showing similar trends since COVID-19 shut down much of the country.
The exceptions are the two priciest metros in the U.S. — Manhattan and San Francisco. In these two areas, inventory is nearly double what it was last year, as homes are staying on the market twice as long as last year.
Otherwise, according to Zillow, urban housing markets are keeping pace with the booming suburbs.
“When you step back and look at the bigger picture, it seems that those writing off urban real estate have done so prematurely,” said Zillow Economist Jeff Tucker in a statement. “There is some localized evidence of a softer urban market, particularly in the highest-priced markets, San Francisco and Manhattan, and an eye-catching divergence in sale prices, but no evidence of a widespread flight to suburban pastures.”
Both urban and suburban areas had a rate of newly pending sales picking up since February, then in early Spring, when COVID-19 hit, the slowdown in these areas was similar, too.
However, the difference in price growth is what sets the two apart. While year-over-year growth in median sale price has slowed in both, it showed through in urban areas a little stronger.
In urban areas, median home price growth is down 9.3 percentage points from pre-pandemic to the end of June, but down just 3.1 percentage points in the suburbs.
The coastal exodus is a huge part of this, as many are seeking larger living spaces after working from home or being cooped up with family in smaller dwellings.
“The primary issue in much of the country is the inventory drought, both urban and suburban, that’s failing to meet the surprisingly robust demand from buyers eager to lock in record-low mortgage rates,” Tucker said.
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